LSI announced late yesterday that it is acquiring ONStor for $25 million  an apparent loss of more than $100 million for the company's VCs. The move gives LSI NAS and unified storage offerings in addition to its Fibre ChannelSANs.

The deal could make for an interesting competitive situation with IBM, which OEMs LSI's midrange SAN offerings and also resells NetApp's NAS products. LSI could wind up competing with IBM on the NAS front  or IBM could OEM LSI's NAS offerings in addition to NetApp's.

IBM accounted for 16 percent of LSI's revenues last year; NetApp gets about 5 percent of its sales from IBM, according to Wedbush Morgan analyst Kaushik Roy.

"There is always a chance that IBM will evaluate a product portfolio expansion  no reason not to keep all your options open," Babineau said. "However, I would hesitate to say that it will impact the NetApp arrangement given that both companies appear to be happy with the relationship at this point."

But Illuminata analyst John Webster sees an LSI-IBM NAS deal as a possibility.

"I'd say it's likely that NetApp is watching this acquisition very closely because it potentially gives IBM a second NAS OEM source that IBM could use as negotiating leverage," said Webster.

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Webster sees NAS vendors positioning themselves ahead of the release of the next version of NetApp's OnTap operating system.

"I think a number of vendors will be responding to the presumed imminent release of OnTap GX8, which does incorporate the Spinnaker scale-out NAS technology it acquired years ago," he said. "While the impact of that release is relatively unknown, I think NetApp competitors will be trying to cover themselves."

HP's (NYSE: HPQ) acquisition of Ibrix is another recent move in the space.

LSI has another possible market for its new NAS lineup: Oracle (NASDAQ: ORCL), which is acquiring LSI partner Sun (NASDAQ: JAVA)  and says it plans to keep Sun's data storage business.

LSI is expected to shed more light on the deal on its quarterly earnings call next week.